How to Finance your own House in Germany


There are several financing options available for home construction in Germany. Before selecting a financing option, it is important to carefully assess your financial situation, goals, and risk tolerance. Seeking individual guidance from a financial expert or a bank can be beneficial in making an informed decision.

Financing options are as follows:

Equity: (Eigenkapital). It is recommended to contribute at least 20% equity to reduce financing costs and improve creditworthiness.

Financing through Banks: Most people finance their home construction through a mortgage loan, using the house as collateral. Conditions can vary from one bank to another, so comparing offers is advisable.

KfW Funding: The Kreditanstalt für Wiederaufbau (KfW) provides programs for energy-efficient construction and renovation, offering low-interest loans or grants.

Building Societies (Bausparkassen): Building society contracts combine saving and loan phases, which can be utilized for home construction.

State Funding: Some German states offer specific programs for home construction, providing subsidies or low-interest loans.

Self-Performance: (Eigenleistung). Costs can be reduced by contributing personal efforts to the construction, such as undertaking certain building tasks.

Building Savings Contract (Bausparvertrag): A building savings contract allows for securing a low-interest loan at a predefined time.

Crowdfunding or Crowdlending: In recent years, alternative financing methods like crowdfunding or crowdlending have gained popularity for construction projects in Germany.

Desmond John Beddy